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For Asia, Data Shows A Slow Climb Out Of Recession

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http://www.nytimes.com/2009/08/12/business...ml?ref=business

China on Tuesday reported a batch of solid economic data for July, two major Asian central banks kept interest rates unchanged and business confidence rose to a two-year high in Australia – news that showed the region is continuing its slow and onerous climb out of recession.

China has withstood the global economic turmoil better than most other countries, thanks to aggressive stimulus measures announced by Beijing last year, and in recent months it has frequently surprised even optimistic economic analysts with buoyant investment, spending and production data.

Data for July, released by the statistics office on Tuesday, showed industrial output, a key measure of wider economic growth, rose 10.8 percent from a year earlier, at a slightly higher pace than in June. Retail sales rose 15.2 percent.

Trade data published separately by the country’s customs office showed exports in July dropped 23 percent from a year earlier, a slightly smaller decline than economists had expected.

The data cemented the view that the China’s giant economy is plowing ahead steadily as government spending and a massive increase in lending by state-controlled banks during the first half of this year helped offset the negative fallout from collapsing demand for Chinese-made products in the United States and in Europe.

Reflecting growing optimism that the government’s tremendous leeway to stimulate growth has put China on a path to solid recovery, economists at Goldman Sachs on Monday raised their forecast for the country’s full-year growth this year to 9.4 percent. This is up from the 8.3 percent they had previously projected, and higher than the government’s target of 8 percent. For 2010, the Goldman Sachs economists expect the Chinese economy to expand 11.9 percent.

However, the pace of growth — and exports in particular — remains significantly below where it was before the global economic crisis began to hit export-dependent Asia late last year.

China’s industry and retail data out on Tuesday, while good, were slightly lower than most economists had projected, and underlined that the economy remains hugely dependent on government spending programs and bank lending to sustain growth. And the export decline was the ninth such fall in a row, showing that depressed exports are likely to remain a major drag on the economy for some time to come.

At the same time, a spike in stock markets and property prices in China has led many to worry that another bubble is in the making. The authorities now face the challenging balancing act of scaling back the pace of bank lending in a bid to deflate price spikes – but doing so without choking off economic growth.

China publishes data showing economic growth based on unsustainable govt injections of cash and the markets love it.

The boom in Chinese stock prices should make anyone feel uncomfortable.

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China publishes data showing economic growth based on unsustainable govt injections of cash and the markets love it.

The boom in Chinese stock prices should make anyone feel uncomfortable.

China is different. They saved in the good times, so they have something put by for a rainy day. Good HPC-compliant practice.

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